Let's hear, next, about investors who try to diversify their portfolios but may have only enriched their advisers. Some brokers and firms have been encouraging customers to invest in managed futures. Those are basically investments in futures contracts, such as gold, or global currencies or pork bellies. They are sold as a way to minimize risk.

David Evans of Bloomberg says, in reality, they've been a bad deal.

DAVID EVANS: Funds were marketed to investors who didn't, in many cases, really understand what they were investing in. And they didn't realize that over time the vast majority of the earnings for many of these people would be diverted off to fees and commissions.

INSKEEP: One of the funds Evans examined was managed by the securities firm Morgan Stanley. Some 30,000 investors bought into it. And the fund did well over 10 years, but commissions and fees actually took all of the investor profits, and complicated disclosure documents insured that most investors never caught on.

EVANS: You read these disclosure documents and they're not easy to understand. I was actually, before I came to Bloomberg, I was a trial attorney at the Commodities Futures Trading Commission for five years and it took me a while this year...

(LAUGHTER)

EVANS: ...to understand what was in these documents, which I never had any exposure to when I was at the Commission. This stuff is not simple to understand. And then getting the numbers, the numbers are not out there. I had to pour through thousands of SEC filings to find the annual reports for these funds and then try to compile how poorly they did. It was only going back and creating a spreadsheet to see, year after year after year, that you realize that the fees are consuming such an enormous portion of the profits - and ultimately, all the profits.

INSKEEP: So was this in fact an opportunity for anybody to make money when the stock market goes down?

EVANS: Well, 2008 was a really good year for managed futures. It was a really bad year for stocks. There have been some years when stocks did poorly and managed futures, even these funds with all their fees, did well. But over time, they've not done that well. We found 63 that filed and almost half of them over the 10 years lost money. Now obviously, you're going to do better in a money market fund than investing in a fund that's lost money. And, of course, the stock market over the past 10 years has done exceedingly well. So to the extent that you had your money in managed futures you did much worse.

INSKEEP: Isn't this a common complaint that is made about a lot of different kinds of stock funds? You have to pay the fund manager a lot. You're hoping the fund manager is so brilliant that he or she earns that commission and also makes use the money. And very often that doesn't happen when just compared with the way the stock market itself moves.

EVANS: Well, you know, rich people put their money into hedge funds. And typically, they charge two percent a year and 20 percent of the profits. Here, investors were paying as much as six to nine percent in a year plus 20 percent of the profits. Now that means if you don't make at least six to nine percent a year, you're losing money.

INSKEEP: Which is hard.

EVANS: To make eight percent, which is a great return a lot of us would be happy to get, you're just at the breakeven point.

INSKEEP: When you talked to fund managers or their representatives or defenders, what did they say?

EVANS: Well, they explained this is an expensive business. I actually had one fellow who runs a fund with more than $1 billion in assets and he was actually surprised that the amount that went to him was such an enormous percentage - in the range of 90 percent. I mean it's coming to him but he was surprised. So I think it's something that surely folks in the industry are aware of, but it's not something that they're going to talk about.

INSKEEP: Is this legal?

(LAUGHTER)

EVANS: Well, you know, Jim Cox, who is a professor of law at Duke University, told me that basically the regulators have given these guys a license to steal. Interestingly, I went back and looked. There were very few complaints that had been filed - lawsuits that had been filed in the last 10 years, despite the fact that investors in many cases have done very poorly. I think a judge, about 10 years ago - I read an opinion where somebody was suing because they had lost money in one of these funds. And he said, look at all these caveats. And there are caveats up the wazoo(ph) in boldface, you can lose all of your money, you have to make lots of money to overcome the fees. But investors in my experience, they're trusting their broker

INSKEEP: Mm-hmm. So if I'm an ordinary investor and someone is trying to sell me a managed futures fund, should I just stay away from that because that's not really an appropriate product for an ordinary investor?

EVANS: I think you should invest if you understand it. And I don't think it's going to be easy to understand it. It's going to take time. And do most investors want to take the time to understand it? Probably not.

INSKEEP: David Evans wrote a story called "Fleeced by Fees," which is in the November issue of Bloomberg Markets Magazine. Transcript provided by NPR, Copyright NPR.